Sunday, December 2, 2012

Jobs

 workers
The modus operandi of vulture capital companies does NOT include creating jobs.  Except, when adding a few jobs would help increase vulture profits.  Like when hiring high profile people, because their names are attractive to propective investors.  
When vultures take over a company the only object is for them to make money, and fast.  And if the company itself makes or loses money, that action is by default..  Now, a money only investment is an entirely different procedure.  Here they purchase stock or bonds, like most investors, but they are in a position to get inside information or, they can trade favors with like companies or they can do stuff to influence the share price.  For the most part it requires no personal involvement.  So this is not even close to vulture investments, where the cross-hairs are only on making money by manipulation. Once a targeted company fits a pattern or blue print for sucking money out, all the red lights turns green. Full speed ahead.
For example, General Moters. Why were there no dollars in private investment money available for GM when they needed it.  When  Romney and Bain and like companies, who are always looking to make money, were approached to invest in the floundering GM it was easy for them to decline because they did not see anything viable for their bloodsucking, quick money making abilities.  To be fair, neither did most, if not all, of the private investment community.  GM was not seen as an investment opportunity, even using any of their creative tactics.  Believe me, if they saw any fast buck opportunity they would have jumped on it.  There is no accusation here, its just factual.
In normal times, they would have welcomed and competed for the chance to sell new GM securities.  Because GM's financial health, good or bad, would not stop them.   Just the name GM meant they would have  little difficulty selling GM investment stuff, regardless of its business condition.  You see, most investment transactions make money salesman  from commissions.  And to sell investments requires good stories on why you should part with your investment money.  And when buying a newly issued investment instrument the underwriter charges a higher than standard commission amount.  So, its what  they want to do. They make money by selling GM or other investment stuff and even those mortgage backed bonds which turned out to be crap.  Crap that they created.  When our venerated rating companies stamped those real estate (crap) bonds as triple A, (AAA),  get out of the way, where's the phone?  Invest in U.S. real estate was the spiel of the day. Moody's and Standard & Poors have never been held accountable for making this dubious rating in the first place and then not removing the AAA status fast when they knew the value of the bonds were deteriorating.  To me the  rating companies were culpable.

Vulture companies rarely if ever risk their own money without the ability to easily shift the risk to other investors.  And usually  their own customers, who get all the risk, as secondary investors.. When I was a neophyte investor I would have jumped at the chance to be a secondary investor. . When a regular Bain customer made an investment in a secondary or a  new stock adjustment offering, for them to make profits was normal, and losses if any were not as big as profits and did not occur often.  So their customers  were also eager.  For a perfect example, go to your computer and Google; Baxter, Bain Capital. And read the NY Times article.
And they are not alone among professional investment companies who make money by the above method.   BUT, in the middle and late 2000's, times were not normal.  Being used to milking their customers, making lots of commissions and etc., even on crap, no, there were no funds available for GM in the private sector.  Zero. Its what Wall Street had become.
So how could Obama justify putting the US Government on the hook, so to speak?  Well, its all in the point of view. Obama was looking at the reestablishing of our wrecked economy.  He saw how a favorable result and future for GM would help the economy of the country. Was it a good bet?  With that objective, Obama thought it was.  His good luck was his uncanny selection of  Ed Whitacre, the former head of A,T&T.  Its laughable when people like Romney, and Santorum and former GM people say any one of many could have presided over the turnaround.
To most investors throughout this country, an investment is a risk.    A Bond investment, no matter its rating, is a risk. A mutual fund is a risk. Woe to the investor who does not factor in risk when making a decision.  But, it takes a smart investor to recognize opportunity and not be afraid of the potential risk to make the most of it.

In 2008, I was for Hilary.  When Obama became the  Democratic candidate, the Miami Beach Tuesday Morning Breakfast Club had David Lawrence Jr., former publisher of the Miami Herald, as the guest speaker.  We spoke after the meeting and he said to me,
"Howard, I've met a lot of politicians and I can tell you, in my opinion, Obama's sincerity of purpose can not be challenged.  For a president, or even when you need  a top executive in business for that matter, when you have someone who is unusually well informed, very intelligent and sincere, what more can you ask?"   That did it for me.

To me, as president everything Obama has done personifies that statement from David Lawrence.

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